The nation's information technology (IT) sector should diversify and pay more attention to application-oriented development, research house International Data Corp (IDC) said yesterday.
The nation should develop embedded technology to become another pillar of the nation's IT industry after excelling in hardware manufacturing, IDC said.
"For the past few decades, Taiwan has focused much more on the hardware side than on the application development side," Philippe de Marcillac, IDC's international business vice president, told the Taipei Times.
While Taiwan primarily relies on hardware, the nation should look to software, particularly as more software is being embedded in hardware, he said.
De Marcillac made the remarks on the sidelines of a press conference of the Framingham, Massachusetts-based research house to celebrate the 40th anniversary of its establishment in Taipei.
Embedded technology refers to chips integrated with software. The technology is widely used in home appliances like washing machines and microwaves, as well as a wide range of consumer electronics including personal digital assistants (PDAs), digital cameras and mobile phones.
As electronic products become smaller, embedded software allows them to function without having to plug them into other machines, said Robin Giang (簡秀芳), IDC's Asia Pacific IT investment and strategy manager.
Embedded software technology is also being used in the financial and public sectors for things such as integrated-circuit credit cards or personal identification cards, Giang said.
With the outlook for consumer electronics seemingly healthy, embedded technology could be a good direction for Taiwan -- which has a key position in the global IT manufacturing sector -- to move in, she said.
IDC forecast that worldwide IT spending would grow 5 percent to US$910 billion this year, bolstered by the economic rebound and rise in corporate IT expenditures.
The Asia-Pacific region is expected to see an increase of 10 percent in IT spending this year to US$88 billion, supported by corporate demand for replacement and upgraded IT systems as well as infrastructure development for both private and public sectors in fast-growing developing countries like China and India.
China's IT market will enjoy growth of about 19 percent this year to an estimated US$30 billion, and India's IT market will grow more than 15 percent to nearly US$40 billion over the same period, IDC said.
The increasing trend toward offshore outsourcing in the IT service industry from developed countries like the US will be a boost to these two emerging markets, the research house said.
India, a leader in the offshore outsourcing sector, will see its IT service exports rise to US$11.9 billion this year from nearly US$10 billion last year, according to the research house's figures.
"China is gearing up to make a play [in this domain] by providing outsourcing services to the US and Japan," de Marcillac said. China could grab 20 percent of the US' IT service spending by 2008, he said.
The global personal computer sector, however, will experience slower growth, leading to price wars in the future, the industry watcher said.
Desktops are going to be replaced by portable computers, de Marcillac said.
"And the sector would see saturation in the mature markets like the US and some European countries," he said.
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